So far this year, Henry Hub natural gas prices have hovered around $3 per MMBtu (million British thermal units). Natural gas is key to the production of nitrogen fertilizer for companies (MOO) such as CF Industries (CF), Terra Nitrogen (TNH), PotashCorp (POT), and Agrium (AGU).
Last week, the average weekly prices of natural gas at Henry Hub fell by as much as 4.2% week-over-week to $2.96 from a weekly average of $3.09 a week ago.
The current price range is close to the EIA’s (U.S. Energy Information Administration) forecast of $3.05 per MMBtu in 2017. In the same September report, the EIA forecasts the natural gas price to rise higher to $3.29 per MMBtu in 2018.
While the range of movement in natural gas prices last week was tight, December may see wider price swings. In its recent update on natural gas prices, the EIA stated that “NYMEX contract values for December 2017 delivery that traded during the five-day period ending September 7 suggest that a range of $2.39/MMBtu to $4.34/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95% confidence level.”
The October report release date is just around the corner, and Market Realist will track changes in expectations after the release.
Next, we’ll discuss phosphate fertilizers.